personal finance - investing in mutual funds

Which of the following are TRUE about Index Funds? (Pick all that are true) a. Index funds are a type of mutual fund. b. Index funds have lower fees than actively managed mutual funds. c. Index funds try to "beat the market." d. Index funds are actively managed by fund managers.

a and b

What is one advantage of choosing a target date fund as your primary retirement investment?

an advantage is that you can pick an investment because it will match your time horizon

What is the benefit of investing in an Exchange Traded Fund (ETF)? a. ETFs guarantee a higher return than mutual funds. b. You have more control and flexibility because you can trade ETFs anytime while the market is open. c. An ETF allows you to pick which stocks and bonds you want in the fund. d. You can trade before the market closes for the day for a fee - usually 1%.

b

Which of the following statements about Mutual Funds are True? (Pick all that are true) a. All actively managed mutual funds "beat the market." b. An advantage of investing in mutual funds is that you don't have to pick individual stocks and bonds. c. Mutual funds that are actively managed by a fund manager are trying to "beat the market" averages. d. Mutual fund managers typically charge fees of 1 - 2% on the assets they manage

b and c

Describe how the asset allocation in a target date fund changes as you near retirement.

the more time you have to save for retirement, you will get more exposure to the stock markets and this can mean higher potential returns but more short term risk

What are the two factors you should consider when choosing which target date fund is best for you?

time horizon and the risk